[Introduced March 1, 2017;
Referred
to the Committee on Political Subdivisions then Finance.]

A BILL to amend the Code
of West Virginia, 1931, as amended, by adding thereto a new article, designated
§5B-2I-1, §5B-2I-2, §5B-2I-3, §5B-2I-4, §5B-2I-5, §5B-2I-6 and §5B-2I-7, all
relating to authorizing local units of government to adopt local energy
efficiency partnership programs and to create districts to promote the use of
energy efficiency improvements by owners of certain real property; providing
for the financing of the programs through voluntary property assessments,
commercial lending, and other means; to authorize a local unit of government to
issue bonds, notes, and other evidences of indebtedness and to pay the cost of
energy efficiency improvements from the proceeds thereof; providing for the
repayment of bonds, notes, and other evidences of indebtedness; to authorize
certain fees; prescribing the powers and duties of certain governmental
officers and entities; and providing remedies.

Be it enacted by the
Legislature of West Virginia:

That the Code of West
Virginia, 1931, as amended, be amended by adding thereto a new article,
designated §5B-2I-1, §5B-2I-2, §5B-2I-3, §5B-2I-4, §5B-2I-5, §5B-2I-6 and §5B-2I-7,
all to read as follows:

ARTICLE 2I. LOCAL
ENERGY EFFICIENCY PARTNERSHIP ACT.

§5B-2I-1. Short
title.

This article shall be
known and may be cited as the “Local Energy Efficiency Partnership Act”.

§5B-2I-2.
Definitions.

As used in this article:

(1) “District” means a
district created under a local energy efficiency partnership program by a local
unit of government that lies within the local unit of government’s
jurisdictional boundaries. A local unit of government may create more than one
district under the program, and districts may be separate, overlapping or
coterminous.

(B) Storm windows and
doors; multiglazed windows and doors; heat-absorbing or heat-reflective glazed
and coated window and door systems; and additional glazing, reductions in glass
area, and other window and door system modifications that reduce energy
consumption;

(C) Automated energy
control systems;

(D) Heating, ventilating
or air-conditioning and distribution system modifications or replacements;

(E) Caulking,
weather-stripping and air sealing;

(F) Replacement or
modification of lighting fixtures to reduce the energy use of the lighting
system;

(G) Energy recovery
systems;

(H) Daylighting systems;

(I) Installation or
upgrade of electrical wiring or outlets to charge a motor vehicle that is fully
or partially powered by electricity;

(J) Measures to reduce
the usage of water or increases the efficiency of water usage;

(K) Any other
installation or modification of equipment, devices, or materials approved as a
utility cost-savings measure by the governing body excluding any and all energy
generating equipment.

(3) “Energy project”
means the installation or modification of an energy efficiency improvement.

(4) “Governing body”
means the county commission of a county, or the council or other similar
elected legislative body of a municipality.

(5) “Local unit of
government” means a county or municipality.

(6) “Person” means an
individual, firm, partnership, association, corporation, unincorporated joint
venture, or trust, organized, permitted, or existing under the laws of this
state or any other state, including a federal corporation, or a combination
thereof. However, a person does not include a local unit of government.

(7) “Property” means
privately owned commercial or industrial real property located within the local
unit of government.

(8) “Local energy
efficiency partnership program” or “program” means a program as described in
section three of this article.

(9) “Record owner” means
the person or persons possessed of the most recent fee title or land contract
vendee’s interest in property as shown by the records of the clerk of the
county commission.

(a) Pursuant to the
procedures set forth in this section, a local unit of government may establish
a local energy efficiency partnership program and may, from time to time,
create a district or districts under the program.

(b) Under a program, the
local unit of government may enter into a contract with the record owner of
property within a district to finance or refinance one or more energy projects
on the property. The contract may provide for the repayment of the cost of an
energy project through assessments upon the property benefitted. The financing
or refinancing may include the cost of materials and labor necessary for
installation, permit fees, inspection fees, application and administrative
fees, bank fees, and all other fees that may be incurred by the record owner
pursuant to the installation on a specific or pro rata basis, as determined by
the local unit of government.

(c) To establish a local
energy efficiency partnership program, the governing body of a local unit of
government shall take the following actions in the following order:

(1) Adopt a resolution
of intent that includes all of the following:

(A) A finding that the
financing of energy projects is a valid public purpose;

(B) A statement of
intent to provide funds for energy projects that are determined to be cost
effective, which may be repaid by assessments on the property benefitted, with
the agreement of the record owners;

(C) A description of the
proposed arrangements for financing the program;

(D) The types of energy
projects that may be financed;

(E) Reference to a
report on the proposed program as described in section four of this article,
and a location where the report is available pursuant to section four of this
article; and

(F) The time and place
for a public hearing on the proposed program;

(2) Hold a public
hearing at which the public may comment on the proposed program, including the
report required by section four of this article;

(3) Adopt a resolution
establishing the program and setting forth its terms and conditions, including
all of the following:

(A) Matters required by
section four of this article to be included in the report; for this purpose,
the resolution may incorporate the report or an amended version thereof by
reference; and

(B) A description of
which aspects of the program may be amended without a new public hearing and
which aspects may be amended only after a new public hearing is held.

(d) A local energy
efficiency partnership program may be amended by resolution of the governing
body. Adoption of the resolution shall be preceded by a public hearing if
required pursuant to subdivision (3), subsection (c) of this section.

(a) The report on the
proposed program required under section three of this article shall include all
of the following:

(1) A form of contract
between the local unit of government and record owner governing the terms and
conditions of financing and assessment under the program;

(2) Identification of an
official authorized to enter into a program contract on behalf of the local
unit of government;

(3) A maximum aggregate
annual dollar amount for all financing to be provided by the local unit of
government under the program;

(4) An application
process and eligibility requirements for financing energy projects under the
program;

(5) A method for
determining interest rates on assessment installments, repayment periods, and
the maximum amount of an assessment.

(6) Explanation of how
assessments will be made and collected consistent with section five of this
article;

(7) A plan for raising
capital to finance improvements under the program. The plan may include any of
the following:

(A) The sale of bonds or
notes, subject to appropriate laws and rules;

(B) Amounts to be
advanced by the local unit of government through funds available to it from any
other source; or

(C) Owner-arranged
financing from a commercial lender; under owner-arranged financing, the local
unit of government may impose an assessment pursuant to section five of this
article and forward payments to the commercial lender or the record owner may
pay the commercial lender directly;

(8) Information
regarding all of the following, to the extent known, or procedures to determine
the following in the future:

(A) Any reserve fund or
funds to be used as security for bonds or notes described in subdivision (7) of
this section;

(B) Any application,
administration, or other program fees to be charged to record owners
participating in the program that will be used to finance costs incurred by the
local unit of government as a result of the program;

(9) A requirement that
the term of an assessment not exceed the useful life of the energy project paid
for by the assessment;

(10) A requirement for
an appropriate ratio of the amount of the assessment to the assessed value of
the property;

(11) A requirement that
the record owner of property subject to a mortgage obtain written consent from
the mortgage holder before participating in the program;

(12) Provisions for
marketing and participant education;

(13) Provisions for
adequate debt service reserve fund;

(14) Quality assurance
and antifraud measures;

(15) A requirement that
a baseline energy audit be conducted before an energy project is undertaken, to
establish future energy savings and cost effectiveness of the project. After
the energy project is completed, the local unit of government shall obtain
verification that the energy efficiency improvement was properly installed and
is operating as intended;

(16) For an energy
project financed with more than $250,000 in assessments, both of the following:

(A) A requirement for
ongoing measurements that establish the savings realized by the record owner
from the energy project; and

(B) A requirement that,
in the contract for installation of the energy project, the contractor
guarantee to the record owner that the energy project will achieve a
savings-to-investment ratio greater than one and agree to pay the record owner,
on an annual basis, any shortfall in savings below this level.

(17) If an energy
efficiency project is implemented under this article, it must contact the local
electric distribution utility and take advantage of any utility sponsored
initiatives, programs, incentives or rebates that may be available for the
project and any energy savings realized by the project are to be counted toward
any energy efficiency commitments the utility may have.

(18) The local unit of
government shall submit a quarterly report to the appropriate electric
distribution utility that includes, but is not limited to, both of the
following:

(i) The total number and
description of each new and ongoing energy project located within the district
that produces energy savings; and

(ii) Any additional
information available to the municipality that the electric distribution
utility needs in order to evaluate, measure and verify energy savings from such
projects.

(b) The local unit of
government shall make the report available for review on the local unit of
government’s website or at the office of the clerk or the official authorized
to enter contracts on behalf of the local unit of government under the local
energy efficiency partnership program.

§5B-2I-5. Assessment
imposed under a local energy efficiency partnership program.

(a) A local unit of
government may impose an assessment under a local energy efficiency partnership
program only pursuant to a written contract with the record owner of the
property to be assessed.

(b) Before entering into
a contract with a record owner under a program, the local unit of government
shall verify all of the following:

(1) That there are no
delinquent taxes, special assessments, or water or sewer charges on the
property;

(2) That there are no
delinquent assessments on the property under a local energy efficiency
partnership program;

(3) That there are no
delinquent payments on loans secured by a mortgage or deed of trust lien on the
property;

(4) That the property
owner is not insolvent or in bankruptcy proceedings; and

(5) That the title of
the benefitted property is not in dispute.

(c) An assessment
imposed under a local energy efficiency partnership program, including any
interest on the assessment and any penalty, is a lien against the property on
which the assessment is imposed until the assessment, including any interest or
penalty, is paid in full. The lien runs with the property and has the same
priority and status as other property tax and assessment liens. The local unit
of government has all rights in the case of delinquency in the payment of an
assessment as it does with respect to delinquent property taxes. When the
assessment, including any interest and penalty, is paid, the lien shall be
removed from the property.

(d) Notwithstanding
subsection (c) of this section, the assessment has priority over any previously
recorded mortgage or deed-of-trust lien only if a written subordination
agreement, in a form and substance acceptable to each prior lienholder in its
sole and exclusive discretion, is executed by the holder of each mortgage or
deed-of-trust lien on the property and recorded with the assessment in the land
records where the property is located.

(e) Installments of
assessments due under a program shall be included in each property tax bill and
shall be collected at the same time and in the same manner as property taxes
collected according to article one, chapter eleven-a of this code.
Alternatively, installments may be billed and collected as provided in a
special assessment ordinance of general applicability adopted by the local unit
of government pursuant to state law or local charter.

§5B-2I-6. Issuance
of bonds.

(a) A local unit of
government may issue bonds or notes to finance energy projects under a local
energy efficiency partnership program.

(b) Bonds or notes issued
under subsection (a) of this section may not be general obligations of the
local unit of government, but shall be secured by one or more of the following
as provided by the governing body in the resolution or ordinance approving the
bonds or notes:

(1) Payments of
assessments on benefitted property within the district or districts specified;

(2) Reserves established
by the local unit of government from grants, bond or note proceeds, or other
lawfully available funds;

(3) Municipal bond
insurance, lines or letters of credit, public or private guaranties, standby
bond purchase agreements, collateral assignments, mortgages and any other
available means of providing credit support or liquidity;

(4) Tax increment
revenues that may be lawfully available for such purposes; or

(5) Any other amounts
lawfully available for such purposes.

(c) A pledge of
assessments, funds, or contractual rights made by a governing body in
connection with the issuance of bonds or notes by a local unit of government
under this article constitutes a statutory lien on the assessments, funds, or
contractual rights so pledged in favor of the person or persons to whom the
pledge is given, without further action by the governing body. The statutory
lien is valid and binding against all other persons, with or without notice.

(d) Bonds or notes of
one series issued under this article may be secured on a parity with bonds or
notes of another series issued by the local unit of government pursuant to the
terms of a master indenture or master resolution entered into or adopted by the
governing body of the local unit of government.

(e) Bonds or notes
issued under this article, and interest payable on such bonds and notes, are
exempt from all taxation by this state and its political subdivisions.

(a) A local unit of
government may join with any other local unit of government, or with any
person, or with any number or combination thereof, by contract or otherwise as
may be permitted by law, for the implementation of a local energy efficiency
partnership program, in whole or in part.

(b) If a local energy
efficiency partnership program is implemented jointly by two or more local
units of government pursuant to subsection (a) of this section, a single public
hearing held jointly by the cooperating local units of government is sufficient
to satisfy the requirements of subdivision (2), subsection (c), section three
of this article.

NOTE: The purpose of this bill is
to authorize local units of government to adopt local energy efficiency
partnership programs and to create districts to promote the use of energy
efficiency improvements by owners of certain real property; to provide for the
financing of such programs through voluntary property assessments, commercial
lending, and other means; to authorize a local unit of government to issue
bonds, notes, and other evidences of indebtedness and to pay the cost of energy
efficiency improvements from the proceeds thereof; to provide for the repayment
of bonds, notes, and other evidences of indebtedness; to authorize certain
fees; to prescribe the powers and duties of certain governmental officers and
entities; and to provide remedies.

Strike-throughs indicate language
that would be stricken from a heading or the present law and underscoring
indicates new language that would be added.